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Usually, when one insider buys stock, it might not be a monumental event. But when multiple insiders are buying like they did in the case of Solvar Limited (ASX:SVR), that sends out a positive message to the company's shareholders.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
View our latest analysis for Solvar
Solvar Insider Transactions Over The Last Year
The insider Alexander Waislitz made the biggest insider purchase in the last 12 months. That single transaction was for AU$257k worth of shares at a price of AU$1.26 each. That means that even when the share price was higher than AU$1.10 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
In the last twelve months insiders purchased 270.00k shares for AU$309k. But insiders sold 205.09k shares worth AU$215k. Overall, Solvar insiders were net buyers during the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.
Insider Ownership Of Solvar
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Solvar insiders own about AU$18m worth of shares. That equates to 8.1% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Solvar Tell Us?
It doesn't really mean much that no insider has traded Solvar shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Solvar and their transactions don't cause us concern. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. For example, Solvar has 3 warning signs (and 1 which doesn't sit too well with us) we think you should know about.